Markets little changed in quiet Asia trading, Tokyo CPI tomorrow

General trend and developments

- Equities, yields, commodities and currencies mostly flat (USD slightly weak) in a session lacking any notable drivers ahead of US Core PCE on Friday.

- Japan Aug PPI Services softer than expected, with prior also revised down by a notable amount. Nevertheless, former BOJ board member Sakurai now expects BOJ rate hikes as early as next month (Oct meeting). [Note: Back in July Sakurai believed the BOJ would not hike until Mar 2026 on US trade uncertainty].

- Several South Korean officials joined their PM in expressing concern that the US-Korea deal (particularly the $350B US investment component) cannot be signed unless ‘safeguards’ are put in place - such as FX swaps with the US in order to avoid a potential 1997-style Korean Won meltdown that seared South Korea so badly at the time. Also warned that the $350B investment package also at risk if the worker visa situation is not worked out.

- As telegraphed by the MOF website last night, Japan MOF at its meeting with primary dealers proposed to cut the issuance of off-the-run long-dated JGBs (maturities of 15.5-39 years) via liquidity enhancement auctions every two months from ¥350B to ¥250B per auction.

- Little new was learned from the Japan BOJ July Minutes (2 decisions ago), which is quite stale now. [Since then, last week’s BOJ Sept meeting saw two dissenters call for a 25bps hike, but it seems that as at end-July all members were still content to wait for more data, including any impact from the US-Japan trade situation to flow through.]

- JP 40-year JGB auction executed without a hitch today, with bid-to-cover above the 12-month average. JP 40-year yields -2bps prior to the auction, fell a further -2bps afterwards as the curve flattened at the long-end.

- China Commerce Ministry issued guidelines on boosting digital consumption prior to the open; Hang Seng Tech index +1.9% and Shanghai IT +2.6%.

- The day after hotter than expected CPI out of Australia (especially the key trimmed mean inflation number for the RBA), today job vacancies also fell markedly to a negative number, with the Aussie dollar pushing back up +0.3% [after overnight losing all initial gains yesterday following the hot CPI data].

- China may introduce $70.0B investment tool later in Sept; the tool is characterized as a policy-driven financing tool.

- US President Trump said to be planning to visit Japan in late October.

- Hang Seng Bank -2.5% after majority owner HSBC said to ask it to "clean up" its Hong Kong property debt

- Amid the wobbly state of the US-India trade negotiations, India reportedly now considering France's Safran-made engines for its fighter jets instead of US-made engines.

- US White House budget office said to instruct federal agencies to prepare "reduction-in-force" plans (potentially mass firings) during the possible govt shutdown from Oct 1st.

- Apple expressed its displeasure with the EU Digital Markets Act, forcing it to make 'concerning' changes and asking the EU to repeal the Act.

** Reminder that South Korea holds its New York investment event today.

- US equity FUTs flat during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Thu 25th (Thu night US Aug Durable Goods, Final Q2 GDP. US Aug Home Sales).

- Fri 26th JP Tokyo CPI, JP BOJ Noguchi, (Fri night US Aug Core PCE).

Holidays in Asia this week

- Tue 23rd Japan.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.2% at 8,748.

- Australia Aug Job Vacancies Q/Q: -2.7% v +2.9% prior.

- Australia sells A$150M of indexed Aug 2035 bonds; Avg Yield: 2.0407% v 2.1788% prior; bid to cover 2.90x v 4.21 prior.

- New Zealand: Signs MOU with China travel agents to increase tourism.

- Fonterra: Reports FY25 (NZ$) NPAT1.19B v 1.12B y/y, Rev 26.45B v 22.8B y/y.

- New Zealand sells total NZ$450M vs. NZ$450M indicated in 2030 and 2033 bonds.

China/Hong Kong

- Hang Seng opens flat at 26,536; Shanghai Composite opens flat at 3,852.

- China may introduce $70.0B investment tool later in Sept; the tool is characterized as a policy-driven financing tool; cites analysts and officials - China Securities Times.

- Hong Kong Financial Sec Chan: Hong Kong to promote a market-based offshore Yuan (CNH) yield curve at the long-end.

- HSBC said to ask Hang Seng bank to "clean up" Hong Kong property debt - financial press.

- PBOC Dep Gov Zou Lan: At the end of Aug, the total balance of China bond market hit CNY192T.

- Shanghai Securities News: PBOC said to be seen taking steps to 'tame rates'.

- Non-principal level Chinese Delegation said to visit US Treasury on Thurs for staff-level technical talks on trade and the economy.

- China Premier Li Qiang: Hope EU will uphold fair competition and WTO rules - comments after meeting with EC Pres von der Leyen [overnight update].

- (UR) EU Commission Pres Von der Leyen: Will discuss China influence on Russia at meeting with China Premier Li Qiang [overnight update].

- (EU) Commission Pres Von der Leyen: Appreciates China's willingness to engage with trade following meeting; Requested that China should influence Russia to negotiate [overnight update].

- China Pres Xi: Must make all-out efforts to guarantee stability in Xinjiang; Must strengthen line of defense against terrorism

- China state press [overnight update].

- China Commerce Ministry (MOFCOM) issues guidelines on boosting digital consumption.

- China to provide policy support for service exports - state media [overnight update].

- China PBOC sets Yuan reference rate: 7.1118 v 7.1077 prior.

- China PBOC Open Market Operation (OMO): Injects CNY484B in 7-day reverse repos; Net drains CNY3.5B v drains CNY17B prior.

Japan

- Nikkei 225 opens flat at 45,623.

- Japan Aug PPI Services Y/Y: 2.7% v 2.9%e.

- US President Trump said to be planning to visit Japan on either Oct 28th or Oct 29th [Japan Chief Cabinet Sec Hayashi said 'nothing has been decided on Trump visiting Japan'] - Japanese media.

- Japan BOJ July Minutes (2 decisions ago): Many members agreed to raise rates if economic outlook realized.

- Japan Steel Industry Head: Continues to monitor dumping situation related to imported steel products.

- Stock splits in Japan hit 12-year high; cites retail investors - Nikkei [update].

- Former BOJ board member Sakurai: Now expects BOJ rate hikes as early as next month (Oct meeting) - financial press.

- Japan Finance Ministry (MOF) meeting with primary dealers: Proposed cutting issuance of long-dated JGBs to ¥250B from ¥350B in liquidity enhancement auctions [overnight update].

Korea

- Kospi opens -0.4% at 3,458.

- South Korea Industry Min Kim: Still committed to concluding US-Korea trade deal, when asked if South Korea is willing to 'walk away' - South Korea press.

- South Korea Fin Min Koo: Discussed FX swap with Treasury Sec Bessent.

- South Korea PM Kim: Seoul won't sign trade deal if there is no commercial rationale; Warns US investment is at risk is there's no visa solution.

- According to South Korea Unification Min, North Korea 'probably' has 2,000KG of high enriched uranium - Yonhap.

- South Korea Pres Lee: Tariff talks should be 'Commercially rational' and benefit both countries' interests - Korean press citing meeting with Commerce Sec Bessent [overnight update].

Other Asia

- (TW) Taiwan said to suspend its chip export curbs on South African chips (after just two days from imposition) - press.

- (ID) Bank Syariah Indonesia said to raise USD deposit rates to 4.00% - US financial press.

- Thailand PM Anutin: Releases policy draft designed to boost domestic economy; to take steps to avoid sovereign rating cuts - press.

- India said to now be considering Safran-made engines for its fighter jets as US-India trade talks 'drag on' - US financial press.

- (ID) Canada announces new trade agreement with Indonesia.

- Thailand PM Anutin: Will dissolve Parliament by the end of Jan; Will hold election by late March or early in April 2026 [overnight update].

- Taiwan Aug Industrial Production Y/Y: 14.4% v 14.9%e [overnight update].

North America

- (US) White House budget office said to instruct federal agencies to prepare "reduction-in-force" plans (potentially mass firings) during possible govt shutdown from Oct 1st - Politico.

- US plans to use emergency powers to stop more coal closures - Press.

- (US) Trump Administration Official: US in talks with G7 and EU on broader rare earth trade measures to prevent price dumping, which could include tariffs, price floors, or other measures.

- (US) Commerce Dept has opened new national security investigations into the import of personal protective equipment, medical items, robotics and industrial machinery [Section 232 investigations] - Nikkei [update].

- (US) MBA Mortgage Applications w/e Sept 19th: 0.6% v 29.7% prior.

- (BR) Brazil Sept FGV Consumer Confidence: 87.5 v 86.2 prior.

- (US) Treasury Sec Bessent: Surprised that Fed Chair Powell hasn't signaled destination for rates to be cut by at least 100-150bps by end-2025; Discussing $20B swap line with Argentina - Fox Business.

- (US) Subprime auto lender Tricolor and car parts supplier First Brands face collapse, raising concerns over lax lending standards; Subprime auto delinquencies in 2025 are at historic highs, with default rates on subprime car loans exceeding 5%, the worst since the 2008 financial crisis - FT.

- (US) AUG NEW HOME SALES: 800K V 650KE; Months supply (seasonally adjusted): 7.4 v 9.2 prior m/m.

- (US) DOE CRUDE: -0.6M V -0.5ME; GASOLINE: -1.1M V -0.5ME; DISTILLATE: -1.7M V -0.5ME.

- (US) Energy Sec Wright: US will announce Wednesday the return of $13B to the US treasury that was slated to subsidize wind, solar, batteries and EVs.

- (US) TREASURY $70B 5-YEAR NOTE AUCTION DRAWS 3.710% V 3.724% PRIOR, BTC 2.34 V 2.36 PRIOR AND 2.38 OVER THE LAST 12 AUCTIONS.

- (US) Fed's Goolsbee (voter for 2025): Warn against series of rate cuts; Labor data show only mild cooling - FT interview.

- (US) Fed’s Daly (non-voter): Labor market has slowed, inflation up less than expected; Fully supported last week's quarter-point rate cut.

Europe

- (UK) PM Starmer may cancel participation in COP30 Climate Summit in Brazil (Nov 2025) - FT.

- Apple says EU Digital Markets Act is forcing us to make 'concerning' changes; Asks EU to repeal the DMA - press.

- (RU) Bulgaria to cease transit of Russian gas exports in 2026 - press cites PM.

- (UR) Russia govt: Idea that Ukraine can win some (territory) back is deeply mistaken (responding to US Pres Trump comments at UN Gen Assembly and on Truth Social yesterday).

- (CZ) CZECH CENTRAL BANK (CNB) LEAVES 2-WEEK REPURCHASE RATE UNCHANGED AT 3.50%; AS EXPECTED.

- (BE) Belgium Sept Business Confidence: -7.9 v -8.9 prior.

- (UK) Bank of England (BOE) Gov Bailey: Still some further room to cut rates; When and how much depends on inflation path.

- (EU) Commission Pres Von der Leyen: Agree on need for social media 'digital majority age' - comments from NY.

- (EU) US has formalized lower auto tariffs for EU, effective Aug 1st, 2025.

- (UK) BOE’s Greene: Monetary policymakers have tended to look through supply shocks, think we may need to rethink this approach; Inflation risk has shifted to upside, risks from trade have abated - speech text.

Levels as of 01:20 ET

- Nikkei 225 +0.2%, ASX 200 flat, Hang Seng flat; Shanghai Composite -0.1%; Kospi -0.1%.

- Equity S&P500 Futures flat; Nasdaq100 flat; DAX flat; FTSE100 flat.

- EUR 1.1737-1.1754; JPY 148.56-148.88; AUD 0.6581-0.6601; NZD 0.5808-5845.

- Gold -0.1% at $3,765/oz; BTC -0.5% at $112,240; Crude Oil -0.5% at $64.54/bbl; Copper +0.8% at $4.8708/lb.